Owning real estate can be a lucrative, but also risky endeavor. Here are some options for protecting your real estate assets in Ohio:
What type of real estate entity should I form in OH?
The type of entity you form for your real estate business is up to you. But when it comes to protecting your real estate assets, you’ll probably want to consider either a limited liability company (LLC) or a corporation. Unlike a sole proprietorship, a partnership, or even a limited partnership (LP), both LLCs and corporations keep business finances separate from your personal finances.
LLCs are common in real estate because they require less time and money to maintain. You can read more about the differences between LLCs and corporations on Northwest’s LLC vs. Corporation page.
Can I create an LLC holding company for real estate?
Yes. Believe it or not, an LLC can legally serve as the sole owner of another LLC. This business model may be beneficial for you if your company owns several properties and you want to protect each property from the potential debts and liabilities of the others. To do this, you would form an LLC for each individual property, then list your main company as the sole owner.
You can read more LLC-owned LLCs on Northwest’s Creating an LLC as a Holding Company page.
Does Ohio offer a series LLC?
Yes. In 2022, Ohio introduced the Ohio Revised Limited Liability Company Act, which now offers Series LLC as a legal business entity. The series LLC model affords the same liability protections as an LLC holding company—however, it streamlines the filing process, eliminating the need to file each LLC individually. (Which can be costly!)
When you create a series LLC, your main company becomes the parent LLC, and each additional LLC formed beneath it—in this case, each real estate property—is known as a series. Each series has the liability protections of a traditional LLC, but uses the formation documents of the parent LLC. This can save you a lot of money down the line.